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ॢबहर गजट [सधरण 1 ०सत बर 21

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ॢबहर गजट [सधरण 1 ०सत बर 21

1. Preamble

An overview of the Indian ESDM Industry

India is steadily marching towards becoming a leading global economy. Government of India’s

initiatives such as ‘Make in India’, ‘Digital India’, ‘Ease of Doing Business in India’ etc. aimed at strengthening the

country, have led to an outburst of positive energy that has tied both the Central and State Governments together.

Each State is gradually coming out in support of the initiatives and contributing towards developing a powerful

economy that is self-reliant and at par with global practices.

Over the last couple of decades since economic liberalization, our country has emerged as the

epicentre of consumer demand propelled by a phenomenal GDP growth. While demand increased across all

sectors, demand for high technology products, specifically electronic products has registered significant growth.

Due to the changing consumer/ institutional demand patterns over the last five years and the expected increase in

demand for similar goods, Electronic System Design and Manufacturing (ESDM) sector has been exhibiting the

maximum promise in the manufacturing space of the country. However, despite there being a significant increase in

the demand, indigenous supply of electronic products has been relatively modest. Today, approximately 65% of

domestic demand is met through imports as electronics accounts for 3^rdlargest imports followed by oil and precious

metals.62 percent of the country’s demands are being met by electronic products from China and Taiwan.

Keeping pace with the global scenario, the Indian ESDM industry is currently one of the fastest growing

industries in the country with its current size of US $94.2 billion in 2015¹. Rapidly increasing population, growing

disposable

income

and

encouraging policy initiatives

by the Government, have

resulted in a huge ESDM

market in India, with demand

reaching US $94.2 billion in

2015. The sector is projected

to grow at a CAGR of 26

percent between 2014 and

2020². According to industry

estimates, India will import

electronics products worth US

$300 billion to meet the US

$400 billion strong demand

between 2014 and 2020. This

gap along with the strong consumer appetite and change in the global landscape in electronic design and

manufacturing capabilities, presents huge opportunities for foreign investors in the country, as,however, still 35

percent of products manufactured by India belong to the ‘Low Value Added Manufacturing’.

Government of India has set a vision to transform India into a global hub for ESDM companies, so as to

meet the growing domestic and global demand. At the time when India is pushing hard to open up her markets,

reduce regulatory roadblocks and develop innovative campaigns such as ‘Make in India’ to attract more foreign

direct investment in a bid to fuel growth in the country and create job opportunities for a fast growing young

workforce, the ESDM sector offers great opportunities of attracting large scale investments from marquee domestic

and global companies.

1 Source: DIPP, Make in India

2 Source: DIPP, Make in India

Indian ESDM Market 2012-2020, in USD billion

EXPORT DOMESTIC

4

ॢबहर गजट [सधरण 1 ०सत बर 21

While multiple challenges to electronic manufacturing in India are currently thwarting the growth of

domestic manufacturing,the last couple of years have witnessed the announcement of a slew of policy measures

and initiatives by Government of India to partly offset these disabilities.The sector currently enjoys several

facilitative Government initiatives, such as, Modified Special Incentive Package Scheme (M-SIPS), Electronics

Manufacturing Clusters Scheme (EMC), National Policy on Electronics (NPE), Export incentives etc. 100 percent

Foreign Direct Investment (FDI) is allowed in the ESDM sector under the automatic route and is subject to all

applicable laws and regulations. The National Policy on Electronics (NPE) has been framed to create a globally

competitive ESDM industry in the country by attracting investments worth more than US $100 billion and

creating employment for 28 million people in the sector at various levels. Likewise, the preferential market

access policy offers preference to nine electronic products and twenty three telecom products for Government

procurement.Recognizing this importance of the ESDM sector of the country as a driving force behind economic

growth, job creation, and citizen enablement, the Government of Bihar is now adopting focused initiatives

towards developing the sector as a priority sector in the State.

Bihar ESDM Vision 2017

The State of Bihar is currently one of the fastest growing State economies of the country. In 2014-15,

Bihar emerged as the fastest growing State economy of the country clocking a growth rate of 17.06 percent of

GSDP at current prices³. Enjoying a healthy growth momentum, the State, according to estimates by the Central

Statistical Organization, experienced a medium term growth rate of 7.6 percent in GSDP (FY 2012 to FY 2016),

with figures for FY 2012 as the base,compared to 6.8 percent of the national average.

The State has already embarked on the development of the ESDM industry with the implementation of

several governance initiatives, and setting up state-of-the-art infrastructure earmarked for IT/ ITeS and ESDM,

such as IT City, IT Tower, and IT Park, which will house ESDM units along with units in the IT/ ITeS sector.Besides

these, to promote industry-led growth in the State, Bihar is also in the process of implementing key reforms and

strategic initiatives that will help the State accelerate its envisaged development plan in the sector. The State

has drafted the Bihar Industrial Investment Promotion Policy 2016, and Bihar Startup Policy 2017, offering

sector specific incentives, and subsidies to ESDM units and startups in the State. The State Government now

envisages to emerge as the next investment destination for ESDM in the country and attract large-scale

investments in the sector in the next five years.

All these initiatives have already led to an outburst of positive energy that has closely tied the

Government and the citizen/ entrepreneur community of the State. As the States of India are wooing investors

by being the most agile and facilitative, the State Government of Bihar has conceptualized the Vision of the

State with special and targeted focus on the ESDM sector. The Government’s vision to develop the ESDM sector

in the State revolve around:

a. Developing Bihar into the next investment destination for ESDM and allied industries

b. Promoting the indigenous manufacturing of entire range of ESDM products for economic growth

and gainful employment

c.

Enhancing employability of the Bihari youth in the ESDM sector to meet most of the resource

demand in the sector of the State

d. Developing the ESDM startup ecosystem in the State for an innovation driven economy and

increased MSME activities

While the ESDM sector of the State is still at a nascent stage, the sector shows promises owing to major

enablers offered by the State, in terms of a robust economy, a large pool of technically skilled workforce,

booming sectoral infrastructure, low cost of doing business, and a stable governance and legal framework.

3 Source: Center for Monitoring Indian Economy (CMIE)

5

ॢबहर गजट [सधरण 1 ०सत बर 21

ESDM has one of the most distributed global value chains and hence every investor needs to ensure

that manufacturing in the State is competitive not only within India, but should be comparable or better than

other global destinations. Interactions with some of the biggest ESDM players globally, helped in identification

of some of the most important issues that they face:

o

Capital Requirements

o

Design (R&D, Patent, IPR)

o

Cost of Capital in India vs other countries

o

Tax (inverted taxation) issues

o

Infrastructure and Connectivity

o

Lack of cutting edge electronics startups/ MSMEs

This helped in understanding that ESDM investors are looking for very specific advantages in selecting

one location over the other. Given the enormity and specialized needs of this sector, therefore, a gradual shift

isneeded from providing a common infrastructure and a general policy support to sector specific interventions

in terms of industrial infrastructure, policy interventions, and regulatory support mechanisms targeting this

sector.

The Government recognizes that the intended changes in the industrial economics of the sector of the

State is a transformational goal and in order to facilitate the same, it will have to introduce sector-targeted

enablers in the form of branding, infrastructure augmentation, changing the policy paradigm and encouraging a

culture of entrepreneurship that will help in creation of a healthy ecosystem of doing business in the sector.

Earlier, States would provide common infrastructure and a general policy support for a diverse set of industrial

sectors. However, the situation today demands sector-specific solutions aimed at addressing its specialized

needs in terms of industrial infrastructure, policy interventions, regulatory support and in some cases, even

social infrastructure. While the State has drafted the Bihar Industrial Investment Promotion Policy 2016, and

Bihar Startup Policy 2017, the holistic growth of any industry in the State can be achieved only if appropriate

sector-level interventions are adopted in policies, infrastructure, skilling, startups, and marketing for the

sector.As the sector evolves into a major focus sector of the State, it needs to be continuously promoted and

encouraged as well, among the global investor communities. Countries like China, Taiwan, Germany, South

Korea, and Singapore, the major exporters in the sector, have all been continuously promoting ESDM with

forward-looking sector-focussed initiatives.

Accordingly, to enable the State to achieve its intended development in the ESDM sector, the Bihar

ESDM Vision2017 has been drafted, charting out targeted incentives and concessions that can potentially create

large scale growth opportunities in the ESDM space of the State. The Bihar ESDM Vision2017 charts out the

specifics of the intended developments through adequate sector-level interventions, while addressing the

specialized needs of the ESDM sector.The interventions and reforms revolve around five major action areas as

given below:

i.

Fiscal support

ii.

Regulatory reforms

iii.

Infrastructure augmentation

iv.

Skill development and entrepreneurship

v.

Market accessibility and branding

6

ॢबहर गजट [सधरण 1 ०सत बर 21

2. Vision, mission, and objectives in the ESDM space

Vision

Once recognized primarily as an agrarian economy, the State of Bihar has a lot to offer in the ESDM

sector. The State Government envisages to exploit the growing electronic manufacturing prowess of the State

and develop the ESDM sector for inclusive growth and large-scale gainful employment generation. The State

also intends to leverage electronic medium to improve service delivery, and provide greater access to

information and convenience to citizens. The ESDM sector of the State is poised to play a dominant role in

contributing towards developing a powerful State economy that is self-reliant as well as at par with notable

global practices.

Mission

1. To promote Bihar as one of the top five investment destinations for ESDM companies in the

country through a balanced regional and sustainable development of the sector of the State.

2. To develop the State into an electronics design and manufacturing hub that is globally competitive

and meets the country’s needs.

3. To increase the contribution of the manufacturing sector to the State economy, in line with the

Central Government’s ‘Make in India’ initiatives, by creating the next ESDM hub in the State.

4. To develop a sector-focused state-of-the-art infrastructure ecosystem in the State through a slew

of financial, regulatory and institutional reforms leading to a revival of investor sentiment in the

State.

5. To create opportunities for gainful employment of the youth in the sector, enhancing their

employability, and developing a sustainable skill ecosystem wherein the workforce is equipped

with employable skills and knowledge so as to be able to contribute to the economic growth of the

State and the country.

6. To reposition Bihar to imply a ‘business-friendly’ and ‘investment-attractive’ destination with

major policy push to build ‘Brand Bihar’, and be a part of the ‘Top-of-the-mind-recall’ amongst

global investors through reforms that are unique and aimed at increasing the investor confidence

in the Vision of the State in the sector.

7. To build a strong eco-system for nurturing innovation in the State and empower startups to grow

through innovation, design, and by inviting new ideas and businesses across domains in the ESDM

sector.

8. To build a strong and sustainable supply chain for raw materials, accessories, parts, and electronic

components for manufacture/ value-addition within the State from within and outside the country.

Bihar ESDM Vision

“To facilitate, promote, and develop the ESDM sector of the State and make Bihar one of the most

preferred investment destinations for ESDM companies in the country, while offering an enabling

environment for industrial investments, transparent and dynamic governance, large scale adoption of R&D

and innovation, and supply of a large pool of technically trained manpower available at affordable cost.”

7

ॢबहर गजट [सधरण 1 ०सत बर 21

Objectives

1.

To develop the ESDM sector as a priority sector of the State.

2.

To promote ‘Brand Bihar’ as a major investment destination for ESDM sector in the

country.

3.

To attract at least five major ESDM players, domestic as well as international, in the

State in the next five years.

4.

To create an incremental employment for10,000 people in the State in the ESDM space

in the next five years.

5.

To generate a gross turnover of Rs. 5,000 Crore in the next five years in the ESDM

space.

6.

To emerge within the top three Startup capitals in the ESDM sector of the country

7.

To conduct skill development and capacity building for at least 5,000 youth in the sector

of the State in the next five years.

8.

To enhance the indigenous manufacturing of electronic products in the State and

promote activities by MSMEs and startups.

9.

To develop an Electronic Manufacturing Cluster (EMC) and a Design and Fabrication

Centre in theState.

Focus Areas

i.

Computer peripherals and other office equipment

ii.

Chip manufacturing and design

iii.

Semiconductors

iv.

Server and storage devices

v.

Communication and Networking devices

vi.

Automotive electronics

vii.

Medical Electronics

viii.

Industrial Electronics

ix.

Telecom electronics

x.

Strategic electronics and devices

xi.

Electronic manufacturing services

xii.

Solar Photo Voltaic including thin film, polysilicon cells

xiii.

Electronic consumer products

xiv.

LEDs

xv.

Embedded software

xvi.

Defence electronic equipment

xvii.

Information, and broadcasting electronic devices

8

ॢबहर गजट [सधरण 1 ०सत बर 21

3.

Incentives

Fiscal support

The cost of capital in our country is much higher as compared to one available abroad at

LIBOR linked interest rate. Also for products with high value addition, the cycle from design to

commercialization is relatively long. High cost of capital in India thus results in high per unit interest

cost on such products.

Today, the biggest challenge faced by the budding entrepreneurs and startups, and even

established industrial players in the country is access to finance. It is imperative for startups to make

significant capital investment for embracing the ever-changing technology and fighting the rising

competition. Startups need to navigate through the unique challenges arising from their venture on

routine basis which may also be expensive.Even the established players face issues with lack of funds

as the cash-to-cash cycle in the manufacturing sector is relatively long.

In order to ensure access to adequate and timely finance at different stages of business

cycles,which in turn will promote investments in the State, the Government of Bihar, therefore,

intends to offer a slew of fiscal incentives and concessions targeting the sector.

The State Government of Bihar has accorded a ‘high-priority’ status to the ESDM sector of the

State, and intends to develop the same with targeted fiscal incentives, considering the specialized

needs of the sector, as per the section 3.0 in the Amended Bihar Industrial Investment Promotion

Policy 2016, as modified from time to time.

3.2 Regulatory Reforms

Ease of Doing Business is manifested by radical regulatory reforms that improve the

experience of doing business by reducing the time, costs and number of procedures associated with

starting, operating and exiting a business. These reforms can provide impetus to the overall economic

growth in the State by enhancing investments, productivity and exports in the manufacturing sector.

The streamlined processes also help Governments save time and resources, allowing them to focus on

investment policies, incentives and other core functions.

The State Government of Bihar would, therefore, ensure that the business environment in the

State is conducive to investors and that the licensing procedures for setting up and running a business

are streamlined, adaptable, transparent and relevant through a slew of regulatory reforms.

3.2.1 Essential service

The State Government may declare non-hazardous Electronic System Design and

Manufacturing as essential service under the Bihar Essential Services Maintenance Act, 1947.

State Government of Bihar is taking efforts to ensure availability of 24 hours of uninterrupted

power supply to the industries situated in all industrial areas. All the industries getting electricity

supply from 132/220 KVA feeders, may be exempted from power cuts, until necessary for safety of

the grid.

9

ॢबहर गजट [सधरण 1 ०सत बर 21

3.2.2 Time-bound single-window clearance

The Government of Bihar will ensure the provision of time-bound single window clearance

mechanisms for faster processing of applications of anchor projectsand Ultra-Mega projects under

EMC scheme and under other Central and/or State Government scheme.

TheState Government designated empowered committee will ensure smooth clearance

process and to process, administer, and disburse incentives in a speedy, transparent and time-bound

manner. The committee will also take up the issue of long-drawn processes of land allotment for

ESDM industries as a special drive putting the entire process on a fast track.

3.2.3 Exemption from inspections

The ESDM industry of the State may be exempt from compliance inspection under the Acts

and Rules as given below, and industries may file self-certification or third party certification, except

for inspection for verification on receiving certain complaints.

i.

Factories Act, 1948 and Rules framed thereunder.

ii.

Minimum Wages Act, 1948 and Rules framed thereunder.

iii.

Payment of Wages Act, 1936 and Rules framed thereunder.

iv.

Contract Labour (Regulation & Abolition) Act, 1970 and Rules framed thereunder.

v.

Payment of Bonus Act. 1965 and Rules framed thereunder.

vi.

Payment of Gratuity Act, 1972 and Rules framed thereunder.

vii.

Maternity Benefit Act, 1961 and Rules framed thereunder.

viii.

Child Labour (Prohibition & Regulation) Act, and Rules framed thereunder.

ix.

Shops & Commercial Establishments Act, 1958 and Rules framed thereunder.

x.

The Inter-State Migrant Workmen (RECS) Act, 1979 and Rules framed thereunder.

xi.

The Equal Remuneration Act, 1976 and Rules framed thereunder.

xii.

Motor Transport Workers Act, 1961 and Rules framed.

Non-hazardous electronic hardware manufacturing units may also be exempted from the

purview of Water (Prevention and Control of pollution) Act, 1974, and Air (Prevention and Control of

pollution) Act, 1981, except in the case of use of power generation sets.

3.2.4 Relaxation of working hours of women employees

Working hours of women employees in the IT product manufacturing and ESDM industry may

be relaxed under the Factories Act and women employees will be allowed to work 24 hours, subject

to the conditions of women’s safety and security, at the working place and during transit, being

sufficiently fulfilled by the employer.In this case the employer will, therefore, be responsible for

escorting the woman employee after general shift to and fro the workplace by armed security guards.

3.3 Infrastructure augmentation

Robust infrastructure is a major hygiene factor and the fulcrum of economic development of

any State. While sector-supportive policies, and competitive and cooperative federalism are hygiene

factors of development, the differentiator, today, is often the sector-focused strategic infrastructure

ecosystem development, that positions the State favourably among the investors.

10

ॢबहर गजट [सधरण 1 ०सत बर 21

With a resurgent economy and a strong focus on bolstering investment and economic

development, the State will undertake targeted infrastructure initiatives to strengthen investor

sentiment in the State.

3.3.1 Additional FSI for ESDM industries

Land usage may be amended for all ESDM/ IT and ITeS units and Parks to enable the

development of ‘Integrated Industrial Townships’. Accordingly, 100 percent additional FSI on the

allowable FSI for Residential/ Office purposes (whichever is more) will be allowed for ESDM units in

approved public and private IT Parks, industrial areas, and EMCs within the State, set up under the

Bihar Industrial Investment Promotion Policy 2016 or previous ICT, IT/ ITeSPolicy of Bihar.

3.3.2 Development of support infrastructure for IT Parks/ EMCs

IT Park developers will be allowed to build residential/commercial complexes and industrial

centres within the Park in the ratio of 20 to 80. Developers of private IT Parks will be permitted to

build quality road connectivity with nearest airports, State or National highways, and the investments

made by the developers will be adjusted against the property taxes payable by the developers of such

Parks to the urban local bodies within the State.

3.3.3 Electronic Manufacturing Cluster

In order to emerge as a significant ESDM player in the East, the State Governmentmay

develop an Electronic Manufacturing Cluster (EMC) in Rajgir, to be developed in the PPP route

through a consortium selected by a bidding process involving QCBS methodology of selection. The

State Government may set up a Design and Fabrication Centre within the EMC. Special targeted

facilities for the ESDM sector may then be provided through the Centre, which would include:

o Test and Certification; Tool Room, Design House

o IT/Communication Centre

o Common Training/ Convention Centre

o Workers Housing Complex and Related facilities

o Utilities, Roads, Backup Power generation, Water supply, Welfare facilities

o ESDM innovation centres for entrepreneurs for concept to prototyping

o

Enabling infrastructure such as VLSI design tools, prototype development facilities, testing

facilities, characterization labs, compliance and certifications labs

3.3.4 Exclusive transport arrangement

As most of the electronic products and components are light weight and are of high value, air

freight is a preferred mode of transport. 24/7 Airport facility, with exclusive cargo access to Anchor

Units without any airspace time restrictions (maximum of 30 minutes travel time from the

manufacturing centre) and quick turnaround time will be ensured for the growth of the sector at the

Patna and the Bodhgaya Airports. A dedicated air cargo complex will be set up close to Patna

International Airport to provide the intended impetus to the exports of hardware and electronic

products from the State.

3.3.5 Promotion of PPP in infrastructure development

The State Government of Bihar recognizes the significance of eliminating the infrastructural

bottlenecks that could possibly jeopardize the growth of ESDM industry in the State. State

11

ॢबहर गजट [सधरण 1 ०सत बर 21

Government will therefore encourage more investments in the PPP route for the creation of state-of-

the-art social and civil infrastructure for professionals engaged in the sector.

The buildings, infrastructure, and facilities, in the form of IT Parks, IT Towers, and IT Zones,

EMCs shall be developed adopting a transparent PPP policy, involving a consortium of developers

and/ or industry players, selected through a transparent bidding process involving QCBS methodology

of selection.

3.4 Skill development and entrepreneurship

Skilled workforce is one of the major contributors to the economic growth of any State. States

with high skill standards are able to cope up in a much better way with the challenges and

opportunities presented by the ever changing domestic and international markets.

Given that ESDM is a high precision industry involving advanced technology, the State

Government accords high priority to skilling and capacity building in the sector, and aims to provide

the overall institutional framework to expedite and scale up skill development efforts.

3.4.1 Skill enhancement and capacity building

i.

Technical institutes in the State will be encouraged to offer more cross-sectoral degrees.

More IT and Electronics modules will be included in the course curricula of other streams of

engineering. Industries will be encouraged to collaborate more with colleges in setting up

research labs in college campus. Internships will be made an integral part of the course

curriculum in all colleges. An independent regulatory authority will be set up under the State

Board of Technical Education, Government of Bihar that will oversee criteria of entry, accord

of degree, ensuring standards of education.

ii.

Vocational Training Improvement Project (VTIP) will be adopted to improve the employability

of the ITI graduates in the State by fine tuning the training delivery according to the demand

of the industry. An Industrial managing Committee will be set up at district-level, with

representation from the local industries, and will facilitate decision making at a local level and

choosing disciplines and trades according to the local industry needs.

iii.

The State Government will incentivize institutes that ensure ‘training to placement’, and such

that training and capacity building should focus on post training placement opportunities and

mobilization of resources and opportunities for self-employment and entrepreneurship with a

focus on Electronics Hardware in the State. The State Government will also train and certify at

least 200 trainers annually for the next five years for the ESDM industry through certified

Training Service Providers (TSPs) in the State.

iv.

The growth of the ESDM industry requires a steady access to a large pool of technology talent.

Accordingly, more number of IIITs and ITIs will be planned to be set up in the State to

augment Information Technology and Electronics skills in the State. Industries should

collaborate more with colleges in setting up research labs in college campuses.

3.4.2 Support for incubation, innovation, and entrepreneurship

Entrepreneurship has multi-faceted impact on the economy of a State. Two important ones

are innovation driven growth and increase in MSME activity which act as building blocks for the

manufacturing as well as services sector.

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The State of Bihar has seen an ocean of changes and developments over the last few years

and has adopted several enablers to push forward the agenda of getting the workforce 'digitally'

skilled, empowering the citizens, bridging the rural-urban divide through digital literacy, improving

Government services and enhancing the access to digital infrastructure. Recognizing the importance

of entrepreneurship as building block of manufacturing in the State, and innovation-driven ideas that

could solve existing issues or bring in greater efficiency in existing processes, now is the right time to

promote entrepreneurship and innovation in the State.

i.

Startups will be provided plug-and-play space with seamless power connectivity and internet

at concessional rates depending on location. Allocated space may be Government owned/

leased or privately leased, with internet connectivity, electricity and water security.

ii.

The State Government shall allot 10 percent of spaces in forthcoming IT Parks, SME

Clusters and Hub, for startups/ incubators/ common shared infrastructure on preference.

3.4.3 Preferential procurement

In order to promote the startup environment in the State, the State Government may

encourage local participation while awarding projects with Government Departments for

implementation, through collaborative arrangements between national and international companies

and local enterprises having relevant experience, expertise and reach. For availing incentives, ESDM

enterprises that have their registered offices in Bihar and having at least 50 percent of their

employees who are domicile of the State, will be termed as local enterprises.

3.5 Market accessibility and Branding

Marketing aims at creating awareness of an area as a location for new investment among

potential investors and correcting weak or misperceptions about the area that could act as a “killer”

factor. In other words, marketing aims at building up the image of the location and at putting it on the

investment destination map.

Hence, while a review of policies and infrastructure in Bihar will suggest that the State has

moved ahead in doing the right things for aiding businesses, it is important to understand how

investors perceive of the State and the developmental activities undertaken in the last few years.

These need to be showcased to the global investor community to foster the mobilization and

attraction of foreign and domestic investments.

3.5.1 Promotional activities

The Government would organize various promotional events and road shows at various

domestic and international locations from time to time to attract large-scale private sector

investments from target countries. The Government shall promote and encourage participation from

the industry, industry associations, PE and VC firms etc. from across the country and worldwide in

ESDM events, exhibitions, roadshows and conferences organized by the State Government. The State

Government will regularly organize Business Plan Competitions, Hackathons, and other events in

partnership with industry bodies, associations, and other agencies to showcase the fact that “Bihar is

changing”.

The State Government will also organize an annual ESDM event, in collaboration with industry

bodies, association, and academia, showcasing the State’s prowess in the ESDM sector and

highlighting the tremendous change that the State has witnessed in the sector in the past few years.

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4. Definition

1.

Anchor unit: An anchor unit refers to an ESDM unit investing more than Rs. 100 Crore,

excluding the cost of land, for commercial operations within the State, and employing

at least 250 people in the State, with at least 100 of them being domicile of the State

of Bihar within three years from the commencement of commercial operations.

2.

Department: Department refers to Department of Government of Bihar, unless

otherwise specified as the Government of India, or the Government of any other

State of the country.

3.

Domicile of the State: Domicile of the State of Bihar means those who have been

defined by the Bihar State Government, from time to time, as the original domicile of

Bihar and who hold the certificate issued for this purpose by the competent authority.

4.

Electronic Manufacturing Cluster (EMC): An Electronic Manufacturing Cluster (EMC)

refers to either a Greenfield EMC or a Brownfield EMC, as notified under the EMC

scheme, issued by the Department of Electronics and Information Technology (DeitY),

Government of India. A Greenfield EMC would be an undeveloped/ underdeveloped

geographical area, preferably contiguous, where the focus is on development of basic

infrastructure amenities and other common facilities for ESDM units. A Brownfield

EMC would be a geographical area where a significant number of existing ESDM units

are located and the focus is on upgrading infrastructure and providing common

facilities for the ESDM units.

5.

ESDMunit: ESDM unit refers to an industrial unit with more than 50 percent

investments, excluding the cost of land, transfer fee, and registration charges, into the

entire value chain of all electronic verticals/ electronic products covered under the

National Policy on Electronics and the related notifications issued by the Department

of Electronics and Information Technology (DeitY), Government of India, including but

not restricted to computer system hardware, communication and networking devices,

strategic electronics and components, electronic manufacturing services, automotive

electronics, industrial electronics, telecom electronics, medical electronics,

information and broadcasting electronic devices and equipment, Nano electronics,

Solar Photo Voltaic including thin film, polysilicon, electronic toys, LEDS, semi-

conductors, embedded software, electronic consumer products, anddefence

electronic equipment. The value chain of ESDM will include designing, manufacturing

and assembling, testing of electronic products/ components/ accessories for OEMs

within the State.

6.

Government: Government means Government of Bihar in this Vision unless otherwise

specified.

7.

Incubation centre: Incubation centre means physical spaces which helps

entrepreneurs to convert their ideas in becoming successful and profitable ventures

by supporting them in business planning, mentoring, recruiting their top team,

commercializing their technologies, developing their products, getting early seed

funding, helping in forging partnerships at the national and global level, advising on

intellectual property, training and development and many other things. This could be

a private agency or a Government institution.

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ॢबहर गजट [सधरण 1 ०सत बर 21

8.

IPR: IPR refers to Intellectual Property Right which is the right granted to the creator

of Intellectual Property and includes copyright, patent, trademark etc.

9.

IT Park: An IT Park refers to a designated industrial area in the State, earmarked for

industrial units with at least 75 percent being in IT/ ITeS and allied sectors, as defined

by the Department of Information Technology, Government of Bihar, from time to

time. The land proposed for the Park should be either Government owned land or

under the absolute possession of the promoter/ developer, and should be free from

encumbrances. The land should not have been obtained/ owned by the promoter on

leasehold basis. The minimum area of the Park should be 3 acre, and should have

minimum five independent units, and at least 20 percent of the land would be

earmarked for the general use/ development of basic infrastructure/ green area and

future requirements.

10.

Project cost: Approved project cost shall mean the project cost finally approved by

the competent authority as defined by the State Government of Bihar from time to

time

11.

Registered entity: Registered entity refers to an entity registered with Registrar of

Companies (RoC) Bihar.

12.

SME: SME refers to small, and medium enterprises in Bihar, where the investment in

plant and machinery is more than twenty-five lakh rupees but does not exceed five

Crore rupees for small enterprises, and where the investment in plant and machinery

is more than five Crore rupees, but does not exceed ten Crore rupees for medium

enterprises.

13.

Startup: Startup means an entity, incorporated or registered in Bihar not prior to five

years with an annual turnover not exceeding Rs. 25 Cr. in any preceding financial year,

working towards innovation, development, deployment or commercialization of new

products, processes or services driven by technology or intellectual property.

14.

Term loan: Term loan refers to term loan sanctioned and disbursed by banks/

financial institutions for the purpose of financing.

15.

Ultra-Mega Project: An Ultra-Mega Project means a project with investments,

excluding land cost, of at least Rs. 500 Crore, for operations within Bihar, and

generating employment for at least 1,000 people, with at least 250 people who are

domicile of the State, within a period of three years from the commencement of

commercial operations.

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ॢबहर गजट [सधरण 1 ०सत बर 21

5.

Index

CAGR

Compound Annual Growth Rate

DPR

Detailed Project Report

EMC

Electronics Manufacturing Cluster

EoDB

Ease of Doing Business

ESDM

Electronic System Design and Manufacturing

FDI

Foreign Direct Investment

FY

Financial Year

GDP

Gross Domestic Product

GSDP

Gross State Domestic Product

ICT

Information and Communication Technology

IIIT

Indian Institute of Information Technology

IIM

Indian Institute of Management

IIT

Indian Institute of Technology

IT

Information Technology

ITeS

Information Technology enabled Service

LIBOR

London Interbank Offered Rate

M-SIPS

Modified Special Incentive Package Scheme

NPE

National Policy on Electronics

PE

Private Equity

PPP

Public Private Partnership

QCBS

Quality and Cost Based Selection

R&D

Research and Development

SGST

State Goods and Services Tax

VTIP

Vocational Training Improvement Project

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1 Preamble

An overview of the Indian IT/ ITeS industry

India is steadily marching towards becoming a leading global economy. Government of

India’s initiatives such as ‘Make in India’, ‘Digital India’, ‘Ease of Doing Business in India’ etc. aimed

at strengthening the country, have led to an outburst of positive energy that has tied both the

Central and State Governments together. Each State is gradually coming out in support of the

initiatives and contributing towards developing a powerful economy that is self-reliant and at par

with global practices. As the Nation reinforces Government-citizen interfaces that are faceless,

paperless and cashless, technology, today, is playing a pivotal role in enhancing the efficiency,

accountability, and transparency of governance systems.

The global IT sector is one of the fastest growing industries in the world, with market value

expected to reach US $1,147 billion by 2017. Likewise, in India as

well the sector has emerged as one of the prime drivers of the

economy of the country. With a huge potential for income

augmentation and employment generation, the Indian IT/ ITeS

sector aggregated revenues worth US $147 billion⁴in FY 2015, with

exports accounting for US $99 billion. The sector accounted for 9.3

percent of the country’s economy and emerged as the single largest

contributor to the services exports with a share of 45 percent.

According to NASSCOM, the sector grew at a CAGR of 15 percent

between 2010 and 2015, three to four times higher than the global

growth and is expected to reach US $300 billion by 2030.

In terms of FDI share, the sector ranks fourth and accounts

for approximately 37 percent⁵ of the total private equity and

venture investments in the country. Between April 2000 and

February 2014, the sector attracted Foreign Direct Investments (FDI)

worth US $13,788.56 million, according to the Department of

Industrial Policy and Promotion (DIPP) estimates. India’s IT BPM sector accounts for approximately

56 percent of the global outsourcing market, and 45 percent of total Indian services exports

according to estimates by DIPP.

The Indian IT/ ITeS industry has come a long way between 1995 and 2015. A large technology

talent pool with strong mix of young and experienced professionals, enhanced internet penetration

and adoption of technology, robust IT infrastructure, and forward looking Government initiatives

have led to the unparalleled growth of the sector in the country. Accounting for 56 percent of the

global outsourcing market, India currently

has 640 Development Centres that serve

companies from more than 80 countries in

the world. The Indian IT firms are moving

from enterprise servicing to enterprise

solutions and are even making global

acquisitions. The top six IT firms account for

only 36 percent of the revenues, with TCS

being the market leader with 10.1 percent

market share. India also plays host to close

to 4,200 tech start-ups, third largest in the

world, and is poised to increase its base to

11,500 tech start-ups by 2020.

4 Source: NASSCOM

5 Source: Department of Industrial Policy and Promotion (DIPP), Government of India

USD BIILLION

IT Sector In India (Export and Domestic) in Used billion

EXPORT DOMESTIC